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An Alternative Method Of Accounting For Stock Options.

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Date Issued:
2014-03-01
Abstract:
Currently, the grant date fair value of employee stock options is expensed over the vesting period. Our study introduces a new valuation approach for stock options and examines the impact of this change on earning per share (EPS) for a sample of firms over the period 2002-2011. The new valuation approach provides data useful to the Financial Accounting Standards Board (FASB) as it determines whether to revise the current option accounting rules. Under the proposed approach, options are valued at their intrinsic value on the grant date (i.e., the opportunity cost or the economic promise associated with the difference between the exercise price of the option and the market price of the stock at each measurement date) and further revalued each reporting date until the options are exercised.
Title: An Alternative Method Of Accounting For Stock Options.
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Name(s): Volkan, Ara, author
Smith, Thomas, author
Valencia, Adrian, author
Type of Resource: text
Genre: Article
Issuance: monographic
Date Issued: 2014-03-01
Extent: 1 online resource
Language(s): English
eng
Abstract: Currently, the grant date fair value of employee stock options is expensed over the vesting period. Our study introduces a new valuation approach for stock options and examines the impact of this change on earning per share (EPS) for a sample of firms over the period 2002-2011. The new valuation approach provides data useful to the Financial Accounting Standards Board (FASB) as it determines whether to revise the current option accounting rules. Under the proposed approach, options are valued at their intrinsic value on the grant date (i.e., the opportunity cost or the economic promise associated with the difference between the exercise price of the option and the market price of the stock at each measurement date) and further revalued each reporting date until the options are exercised.
Identifier: fgcu_ir_000353 (IID), 10.19030/jabr.v30i2.8415 (doi)
Note(s): The publisher's version of the article is available at https://doi.org/10.19030/jabr.v30i2.8415
Subject(s): option valuation models
tax impact of options
true cost of options
Stock options.
Links: https://doi.org/10.19030/jabr.v30i2.8415
Persistent Link to This Record: http://purl.flvc.org/fgcu/fd/fgcu_ir_000353
Use and Reproduction: Copyright held by author(s).
Use and Reproduction: http://rightsstatements.org/vocab/InC/1.0/
Host Institution: FGCU
Is Part Of: Journal of Applied Business Research.

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